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Author: PublicInvest   |   Latest post: Fri, 22 Jan 2021, 10:40 AM

 

PublicInvest Research Headlines - 29 Jul 2020

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Economy

  • US: Consumer confidence retreats on diminished expectations. The Conference Board’s index decreased to 92.6 from a revised 98.3. The median estimate of economists surveyed by Bloomberg called for a reading of 95 in July. The group’s gauge of expectations fell by the most since March, while household sentiment about current conditions climbed. The latest reading of sentiment adds to evidence of a slowing in the pace of the economic recovery from the pandemic as the virus interrupts re-openings in several states. The sub index of expectations, an indication of short-term outlook on the economy, dropped 14.6pts to 91.5, while attitudes about current conditions climbed to a four-month high of 94.2. (Bloomberg)
  • US: Fed extends emergency programs three months to end of year. The Fed extended most of its emergency lending programs by three months, through the remainder of 2020, to help an economy still struggling with the coronavirus pandemic. Since mid-March, the Fed has opened nine emergency programs aimed at pumping liquidity into short-term credit markets and extending credit to businesses and local governments hit hard by the economic fallout from the virus. The facilities have the potential to deploy trillions of dollars, but so far have only about USD100bn in loans outstanding, partly because traditional lenders have returned to short-term markets, making Fed liquidity unnecessary. (Bloomberg)
  • EU: ECB urges banks to pause shareholder payouts for longer. The ECB extended a de facto ban on banks returning capital to shareholders and urged them to show restraint on bonuses after the coronavirus outbreak, dealing a blow to lenders who lobbied for business as usual. The supervisor asked that banks not pay dividends or buy back shares at least until January, three months longer than initially indicated, and “to be extremely moderate with regard to variable remuneration”. The ECB said it will review its stance again in the 4Q. (Bloomberg)
  • EU: German manufacturers' export expectations improve in July–Ifo. German manufacturers' export expectations strengthened in July. The Ifo export expectations index for manufacturing rose to +6.9pts in July from -2.2pts in June. Cautious optimism is spreading among German exporters. German exports are benefiting from the economic recovery in many countries. Expectations among car manufacturers showed strong improvement in July. Confidence also returned to the electronics and chemical industries. Pessimism in the mechanical engineering sector decreased noticeably, but sales were not yet expected to rise in July. (RTT)
  • UK: Rishi Sunak warned ‘premature’ end to furlough risks 10% jobless rate. Chancellor of the Exchequer Rishi Sunak’s “premature” withdrawal of government support means UK unemployment will rise above 3m before the end of 2020, according to an influential think tank. The warning from the National Institute of Economic and Social Research comes as the government prepares to wind down its furloughing plan, which has helped support the wages of 9.5m jobs, next week. The program is set to end in October, a plan that Chief Secretary to the Treasury Steve Barclay, Sunak’s No. 2 reiterated, saying the chancellor had been “clear” on the matter. An extension would prevent joblessness hitting 10% and be relatively inexpensive. (Bloomberg)
  • UK: Retail sales recover in July – CBI. UK retail sales grew in July after three months of sharp declines due to the restrictions imposed to contain the spread of the coronavirus. The retail sales balance rose to +4% in July from -37% in June. Economists had forecast the balance to improve moderately to -25%. However, a net 5% expects sales to fall next month. Alongside higher grocery volumes, sales of hardware & DIY products and other normal goods returned to growth in the year to July. Rain Newton-Smith, CBI chief economist said that "The re-opening of non-essential retail was a vital step towards recovery but isn't a cure-all”. (RTT)
  • China: Fitch retains sovereign ratings at 'A+'. Fitch Ratings maintained the sovereign ratings of China as the economy logged a remarkable recovery from the downturn posed by the coronavirus pandemic. The rating agency retained the credit ratings at 'A+' with a 'stable' outlook. Fitch said the ratings were underpinned by strong external finances, a track record of strong macroeconomic performance, and size as the world's second-largest economy. Nonetheless, the agency cited large structural vulnerabilities in the financial sector, relatively low per capita income, and weaker governance metrics than those of 'A' peers as major rating constraints. (RTT)

Markets

  • Axiata (Neutral, TP: RM3.70): Axiata, Telefonica to collaborate on enterprise segment. Axiata Group's businessto-business unit, Axiata Enterprise, has entered into a strategic partnership with Madrid-headquartered Telefónica, becoming the only Asian partner under the Telefónica Partners Programme. According to their joint statement, they sealed an agreement today to work together and benefit from their joint scale, combined expertise and market presence. The agreement leverages on the companies' footprints in Asia, Europe and Latin America and the growing demand of their services in these regions. (Bernama)
  • Sunway: Buys land in Kelantan for new 200-bed hospital. Sunway is buying a leasehold land in Kota Baru, Kelantan from Liziz Standaco SB for RM28.7m, to construct a 200-bed hospital. This marks the group's healthcare maiden expansion into the east coast region. (The Edge)
  • DNeX: Proposes private placement to raise up to RM109.14m. Dagang NeXchange (DNeX) is proposing to undertake a private placement of up to 20% of its total issued shares to third party investors at an indicative issue price of 22 sen per placement share, which is expected to raise up to RM109.14m to fund its next phase of growth. The group said it intends to use the gross proceeds to mainly finance suitable and viable potential growth opportunities which in turn can generate positive returns moving forward. (Sun Daily)
  • Ranhill: Gets Indonesian city’s approval to build and operate water treatment plant. Ranhill Utilities said it has received a letter of acceptance from the mayor of Bandung for its proposal to build, operate and transfer a water treatment plant in the Indonesian city, subject to negotiations with the relevant government agencies The group will be involved in the operations and maintenance of the 30m-litre-a-day treatment plant for 30 years, with the water tariff set at IDR3,200 per cubic metre. (The Edge)
  • ConnectCounty: RTO deal with S5 Systems is off. ConnectCounty Holdings said it has ceased all negotiations pertaining to the possible reverse takeover (RTO) exercise involving S5 Systems SB. This comes after it was reported that Ancom Logistics had proposed an RTO exercise which entailed the acquisition of the entire share capital in S5 Holdings Inc — the parent company of S5 Systems. (The Edge)
  • AWC: Inks MoU to explore water-related project opportunities. AWC is partnering with Techkem Utilities SB to jointly explore water-related project opportunities in Malaysia and the Asean region. (The Edge)
  • Oversea Enterprise: Major shareholder in stake sale talks with potential investor. Oversea Enterprise (OEB) said it is not aware of any reasons that could explain the sharp rises in its share price and volume recently. In response to the UMA query, the small-cap restaurant chain operator, however, said two of its directors and a major shareholder had been approached by a potential investor. "The parties are in discussions on the proposed disposal of their respective shares in OEB to the potential investor," it said. (The Edge)

MARKET UPDATE

  • The FBM KLCI might open lower today after US stocks indices closed lower Tuesday, as investors monitored talks between Republicans and Democrats on a second coronavirus aid package and tuned in to a deluge of second-quarter corporate results. The Dow Jones Industrial Average finished 205.49 points lower, or 0.8%, at 26,379.28, while the S&P 500 shed 20.97 points, or 0.7%, ending at 3,218.44, after briefly trading positive. The Nasdaq Composite lost 134.18 points, or 1.3%, to close at 10,402.09. In Europe, the Stoxx 600 Europe index and the UK’s FTSE 100 both closed 0.4% higher.
  • Back home, the FBM KLCI closed up 18.46 points or 1.16% at its intraday high of 1,609.94 as investors weighed corporate earnings against the possibility of a second wave of global Covid-19 infections. In Asia, China’s CSI 300 gauge rose 0.9%, the Shanghai Composite gained 0.7%, Hong Kong’s Hang Seng Index rose 0.7% and Japan’s Nikkei 225 fell 0.3%.

Source: PublicInvest Research - 29 Jul 2020

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